Cherry Hill lawyer Michael Kwasnik, under federal investigation in an alleged $8.5 million Ponzi scheme, has pleaded guilty to state money-laundering charges in the theft of $1.1 million from a 96-year-old widow.

The New Jersey Attorney General's Office said that under the plea agreement, signed quietly in late January, Kwasnik will repay the estate of the Cherry Hill woman, who died sometime after he was indicted on Nov. 7, 2011.

Kwasnik remains the focus of a federal criminal probe into the scheme that authorities say was used to bilk dozens of elderly victims.

"The plea agreement does not in any way affect any potential criminal charges that would be filed in connection with the Ponzi scheme," said Peter Aseltine, a spokesman for Attorney General Jeffrey S. Chiesa.

Kwasnik is scheduled for sentencing May 10 before Superior Court Judge Irvin J. Snyder. He will serve no time beyond the five months he spent in the Camden County Jail after his arrest. He agreed to repay the estate by the end of his up-to-five-year probationary period, the Attorney General's Office said.

Kwasnik also pleaded guilty to charges of money laundering in connection with the misappropriation of $112,000 from an insurance settlement for a Williamstown couple. The couple were clients of Kwasnik's firm, Kwasnik, Kanowitz & Associates. He agreed to repay that amount by the time of his 10 sentencing.

Kwasnik was an unsuccessful candidate for the New Jersey Assembly in the 1995 general election as a Democrat.

A few days after his indictment, he was arrested Nov. 10, 2011, at a bus station in Dothan, Ala.

Kwasnik's arrest closely followed a report in The Inquirer detailing allegations by former legal clients that he had misappropriated millions of dollars that they had invested with him. In many instances, the former clients and investors said they had given Kwasnik virtually all the money they had.

Kwasnik had long been on the radar of securities and attorney regulators in New Jersey.

Clients had filed ethics complaints against him as early as 2007, and the New Jersey Office of Attorney Ethics had completed preliminary investigations of Kwasnik's conduct and concluded he had engaged in "fraud, deceit, misrepresentation, and dishonesty."

Officials of Liberty Bell Bank, a community bank in Evesham where Kwasnik was one of a group of founding investors, concluded that he used client funds deposited at the bank to cover shortfalls at his law firm. The officials reported the transactions to the Office of Attorney Ethics.

In a civil suit filed shortly before Kwasnik's indictment, state Attorney General Paula Dow accused Kwasnik and several associates of running a Ponzi scheme through a company named Liberty State Benefits. The suit charged that of the $13.5 million raised for investments in the company, millions were paid directly to Kwasnik, his law firm, or members of his family. Those transactions are at the heart of the federal investigation.

Contact Chris Mondics at 215-854-5957 or cmondics@phillynews.com.